Federal Register / Vol. 86, No. 133 / Thursday, July 15, 2021 / Notices 37391 

22 15 U.S.C. 78s(b)(3)(A)(ii). 

23 17 CFR 240.19–4(f)(2). 24 17 CFR 200.30–3(a)(12). 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

The Exchange believes its proposal 

will not impose any burden on intramarket competition because the 

Exchange believes that its proposal will 

not place any category of Exchange 

market participant at a competitive 

disadvantage. The proposal to modify 

the volume threshold for the alternative 

Volume Criteria in Tier 3 is intended to 

improve market quality. The Exchange 

believes that its proposal will encourage 

Market Makers to improve market 

quality by providing the additional 

incentive to Market Makers in SPY, 

QQQ and IWM options for Market 

Makers that send additional SPY orders, 

which results in narrower bid-ask 

spreads and increased depth of 

liquidity. This in turn will attract 

additional order flow to the Exchange. 

Accordingly, the Exchange believes that 

the proposed changes will continue to 

attract order flow to the Exchange, 

thereby encouraging additional volume 

and liquidity to the benefit of all market 

participants. 

The Exchange believes its proposal 

will not impose any burden on intermarket competition because the 

Exchange notes that it operates in a 

highly competitive market in which 

market participants can readily favor 

competing venues if they deem fee 

levels at a particular venue to be 

excessive, or rebate opportunities 

available at other venues to be more 

favorable. In such an environment, the 

Exchange must continually adjust its 

fees to remain competitive with other 

options exchanges. Because competitors 

are free to modify their own fees in 

response, and because market 

participants may readily adjust their 

order routing practices, the Exchange 

believes that the degree to which fee 

changes in this market may impose any 

burden on competition is extremely 

limited. The Exchange believes that the 

proposed rule changes reflect this 

competitive environment because they 

modify the Exchange’s fees in a manner 

that encourages market participants to 

continue to provide liquidity and to 

send order flow to the Exchange. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act,22 and Rule 

19b–4(f)(2) 23 thereunder. At any time 

within 60 days of the filing of the 

proposed rule change, the Commission 

summarily may temporarily suspend 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. If the Commission 

takes such action, the Commission shall 

institute proceedings to determine 

whether the proposed rule should be 

approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

PEARL–2021–31 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–PEARL–2021–31. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–PEARL–2021–31, and 

should be submitted on or before 

August 5, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.24

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–15037 Filed 7–14–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

34326; 812–15175] 

Fidelity Beach Street Trust, et al. 

July 9, 2021. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of an application to 

amend a prior order for exemptive 

relief. 

SUMMARY OF APPLICATION: Applicants 

request an order (‘‘Amended Order’’) 

that would amend a prior order to 

permit the Funds, as defined below, to 

use Creation Baskets (as defined below) 

that include instruments that are not 

included, or are included with different 

weightings, in the Fund’s Tracking 

Basket (as defined below). 

APPLICANTS: Fidelity Beach Street Trust 

(‘‘Beach Street’’), Fidelity Management 

& Research Company LLC (‘‘FMR’’), 

Fidelity Distributors Company LLC 

(‘‘FDC’’) and Fidelity Covington Trust 

(‘‘New Applicant’’ and, together with 

Beach Street, FMR and FDC, the 

‘‘Applicants’’). 

FILING DATES: The application was filed 

on October 30, 2020, and amended on 

April 2, 2021, June 11, 2021 and June 

30, 2021. 

HEARING OR NOTIFICATION OF HEARING: 

An order granting the requested relief 

will be issued unless the Commission 

orders a hearing. Interested persons may 


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37392 Federal Register / Vol. 86, No. 133 / Thursday, July 15, 2021 / Notices 

1See Fidelity Beach Street Trust, et al., 

Investment Company Act Release No. 33683 (Nov. 

14, 2019) (notice) and Investment Company Act 

Release No. 33712 (Dec. 10, 2019) (order). Except 

as specifically noted in the application, all 

representations and conditions contained in the 

application previously submitted with the 

Commission (File No. 812–14364), as amended and 

restated, and filed with the Commission on 

November 8, 2019 (the ‘‘Prior Application’’) remain 

applicable to the operation of the Funds and will 

apply to any Funds relying on the Amended Order. 

2On January 1, 2020, each of FMR Co., Inc. and 

certain other Fidelity investment adviser entities 

merged with and into Fidelity Management & 

Research Company. Thereafter, Fidelity 

Management & Research Company redomiciled as 

a Delaware limited liability company and was 

renamed Fidelity Management & Research 

Company LLC. As FMR Co., Inc. no longer exists, 

it is no longer an applicant. 

3As described in note 2, Fidelity Management & 

Research Company has redomiciled as a Delaware 

limited liability company and been renamed 

Fidelity Management & Research Company LLC. 

4On January 1, 2020, Fidelity Distributors 

Corporation merged with and into Fidelity 

Investments Institutional Services Company, Inc. 

(‘‘FIISC’’). Thereafter, FIISC redomiciled as a 

Delaware limited liability company and was 

renamed Fidelity Distributors Company LLC. As 

Fidelity Distributors Corporation no longer exists, it 

is no longer an applicant. 

5The relief granted in the Prior Order under 

section 12(d)(1)(J) of the Act for an exemption from 

sections 12(d)(1)(A) and 12(d)(1)(B) of the 1940 Act 

(the ‘‘Section 12(d)(1) Relief’’), and relief under 

sections 6(c) and 17(b) of the Act for an exemption 

from sections 17(a)(1) and 17(a)(2) of the Act 

relating to the Section 12(d)(1) Relief, will expire 

one year from the effective date of rule 12d1–4, 

except as necessary to allow a Fund’s receipt of 

Representative ETFs included in its Tracking Basket 

solely for purposes of effecting transactions in 

Creation Units, according to the terms of the Prior 

Application and notwithstanding the limits of Rule 

12d1–4(b)(3). See Fund of Funds Arrangements, 

Investment Company Act Rel. No. 10871 (Oct. 7, 

2020), at III. 

6All capitalized terms not otherwise defined in 

this notice have the meanings ascribed to them in 

the Prior Application. 

7 Deposit Instruments and Redemption 

Instruments may include cash and/or securities. 

8The Funds are not be able to operate in reliance 

on rule 6c–11 because they do not disclose their 

portfolio holdings on a daily basis as required by 

the rule. See rule 6c–11(c)(1)(i) (requiring an ETF 

to disclose prominently on its website, publicly 

available and free of charge, the portfolio holdings 

that will form the basis for each calculation of NAV 

per share). 

9The Prior Applicants represented in the Prior 

Application that a Fund’s Tracking Basket will 

solely consist of a combination of Strategy 

Components, Representative ETFs, and cash and 

cash equivalents. Applicants note that a Fund’s 

Tracking Basket may also consist of select securities 

from the universe from which that Fund’s 

investments are selected, such as a broad-based 

market index. 

request a hearing by emailing the 

Commission’s Secretary at SecretarysOffice@sec.gov and serving Applicants 

with a copy of the request by email. 

Hearing requests should be received by 

the Commission by 5:30 p.m. on August 

3, 2021 and should be accompanied by 

proof of service on the Applicants, in 

the form of an affidavit, or, for lawyers, 

a certificate of service. Pursuant to rule 

0–5 under the Investment Company Act 

of 1940 (‘‘Act’’), hearing requests should 

state the nature of the writer’s interest, 

any facts bearing upon the desirability 

of a hearing on the matter, the reason for 

the request, and the issues contested. 

Persons who wish to be notified of a 

hearing may request notification by 

emailing to the Commission’s Secretary 

at Secretarys-Office@sec.gov. 

ADDRESSES: The Commission: 

Secretarys-Office@sec.gov. Applicants: 

cynthia.lo.bessette@fmr.com, with 

copies to john.ohanlon@dechert.com, 

allison.fumai@dechert.com and 

stephanie.capistron@dechert.com. 

FOR FURTHER INFORMATION CONTACT: 

Marc Mehrespand, Senior Counsel; 

Trace Rakestraw, Branch Chief, at (202) 

551–6825 (Division of Investment 

Management, Chief Counsel’s Office). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained via the Commission’s 

website by searching for the file 

number, or for an applicant using the 

Company name box, at http://

www.sec.gov/search/search.htm or by 

calling (202) 551–8090. 

I. Introduction 

1. On December 10, 2019, the 

Commission issued an order (‘‘Prior 

Order’’) 1 to Beach Street, FMR Co., 

Inc.,2 Fidelity Management & Research 

Company 3 and Fidelity Distributors 

Corporation 4 (the ‘‘Prior Applicants’’) 

under section 6(c) of the Act for an 

exemption from sections 2(a)(32), 

5(a)(1), 22(d), and 22(e) of the Act and 

rule 22c–1 under the Act, under 

sections 6(c) and 17(b) of the Act for an 

exemption from sections 17(a)(1) and 

17(a)(2) of the Act, and under section 

12(d)(1)(J) of the Act for an exemption 

from sections 12(d)(1)(A) and 

12(d)(1)(B) of the Act.5 The Prior Order 

permitted Prior Applicants to introduce 

a novel type of actively-managed 

exchange-traded fund (‘‘ETF’’) that is 

not required to disclose its portfolio 

holdings on a daily basis (each, a 

‘‘Fund’’). Rather, pursuant to the Prior 

Order, each Business Day 6 a Fund 

publishes a basket of securities and cash 

that, while different from the Fund’s 

portfolio, is designed to closely track its 

daily performance (the ‘‘Tracking 

Basket’’). 

2. Pursuant to the Prior Order, a Fund 

sells and redeems its shares (‘‘Shares’’) 

only in Creation Units and generally on 

an in-kind basis. Purchasers are 

required to purchase Creation Units by 

making a deposit of Deposit Instruments 

and shareholders redeeming their 

Shares receive a transfer of Redemption 

Instruments.7 Under the Prior Order, the 

names and quantities of the instruments 

that constitute the Deposit Instruments 

and the Redemption Instruments for a 

Fund (collectively, the ‘‘Creation 

Basket’’) are the same as the Fund’s 

Tracking Basket, except to the extent 

purchases and redemptions are made 

entirely or in part on a cash basis. 

3. The New Applicant is organized as 

a business trust under the laws of The 

Commonwealth of Massachusetts and is 

registered with the Commission as an 

open-end management investment 

company. The New Applicant consents 

to, and will comply with, the terms and 

conditions of the Prior Order, as 

amended by the requested Order, to the 

same extent as Beach Street, FMR and 

FDC. 

4. Applicants now seek to amend the 

Prior Order to, in effect, give the Funds 

the same flexibility with respect to 

Creation Basket composition as afforded 

to ETFs relying on rule 6c–11.8 More 

specifically, Applicants have requested 

that the Funds be allowed to use 

Creation Baskets that include 

instruments that are not included, or are 

included with different weightings, in 

the Fund’s Tracking Basket. 

II. The Application 

A. Applicants’ Proposal 

5. Upon amending the Prior Order, 

the names and quantities of the 

instruments that may constitute a 

Creation Basket will generally be the 

same as the Fund’s Tracking Basket, but 

a Fund may accept Creation Baskets that 

differ from the Tracking Basket. Each 

Business Day, before the open of trading 

on the Exchange where a Fund is listed, 

the Fund will publish on its website the 

composition of any Creation Basket 

exchanged with an AP on the previous 

Business Day that differed from such 

Business Day’s Tracking Basket other 

than with respect to cash. 

6. Applicants represent that, for 

portfolio management or other reasons, 

the Funds may determine that it is 

desirable to use Creation Baskets that 

differ from the Tracking Basket 9

(beyond cash substitutions). For 

example, a Fund may want to use a 

Creation Basket that contains 

instruments that are not included in a 

Fund’s Tracking Basket if the Adviser or 

Sub-Adviser seeks to add an instrument 

to the Fund’s actual portfolio) without 

incurring transaction costs associated 

with the purchase of the instrument for 

cash. Similarly, if the Adviser or SubAdviser decides to sell an instrument 

from a Fund’s actual portfolio, the 


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Federal Register / Vol. 86, No. 133 / Thursday, July 15, 2021 / Notices 37393 

10Pursuant to condition A.9, each Fund will also 

maintain and preserve a copy of the Tracking 

Basket published on the Fund’s website for each 

Business Day and a copy of each Creation Basket 

made available. 

11See Exchange-Traded Funds, Investment 

Company Act Release No. 33646 (Sept. 25, 2019) 

(‘‘ETF Adopting Release’’), at 80–94 (discussion of 

rule 6c–11 requirement for ETF policies and 

procedures concerning basket construction and 

acceptance and heightened policies and procedures 

for custom baskets). 

12See supra note 4. 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

instrument may be included in a 

Creation Basket with the expectation 

that the Fund will deliver it in-kind 

during a redemption transaction. 

7. The Funds will use the requested 

basket flexibility only in circumstances 

under which Applicants believe there 

will be no harm to the Funds or their 

shareholders, and in order to benefit the 

Funds and their shareholders by 

reducing costs, increasing efficiency and 

improving trading. 

8. Pursuant to condition A.10 herein, 

each Fund will adopt and implement 

written policies and procedures 

regarding the construction of its 

Creation Baskets in accordance with 

rule 6c–11 under the Act. For purposes 

of the requirement to comply with the 

policies and procedures provision in 

rule 6c–11, only Creation Baskets that 

differ from a Fund’s Tracking Basket 

will be treated as a ‘‘custom basket’’ 

under rule 6c–11(c)(3). 

9. Furthermore, pursuant to condition 

A.9 herein, each Fund will comply with 

the recordkeeping requirements of rule 

6c–11.10 For purposes of the 

requirement to comply with the 

recordkeeping provision in rule 6c–11, 

only Creation Baskets different from a 

Fund’s Tracking Basket will be treated 

as a ‘‘custom basket’’ under rule 6c– 

11(d)(2)(ii). 

B. Considerations Relating to the 

Requested Relief 

9. Applicants represent that the 

ability to utilize a Creation Basket that 

includes instruments that are not 

included, or are included with different 

weightings, in a Fund’s Tracking Basket, 

or are included in different weightings, 

does not raise any new policy concerns 

about reverse engineering of a Fund’s 

portfolio, self-dealing or overreaching, 

or selective disclosure beyond those 

concerns addressed in connection with 

the Prior Order. 

10. Reverse Engineering. Applicants 

acknowledge that, by using a Creation 

Basket that includes instruments that 

are not included in a Fund’s Tracking 

Basket, or are included in different 

percentages, and by publishing such 

Creation Basket on its website, the Fund 

would provide market participants with 

additional information about which 

instruments it adds or removes from the 

Fund’s actual portfolio. However, 

Applicants represent that they will 

operate the Funds in a manner designed 

to minimize the risk of reverse 

engineering and, for the reasons set 

forth in the application, believe 

successful front-running or free-riding is 

highly unlikely. 

11. Self-Dealing or Overreaching. 

Applicants state that APs and other 

market participants will not have the 

ability to disadvantage the Funds by 

manipulating or influencing the 

composition of Creation Baskets, 

including those that differ from the 

Tracking Basket. Like the basket and 

custom basket policies and procedures 

required of ETFs by rule 6c–11, the 

Funds will adopt and implement 

written policies and procedures that 

govern the construction of Creation 

Baskets and the process that will be 

used for the acceptance of Creation 

Baskets to safeguard the best interests of 

the Funds and their shareholders.11

12. Selective Disclosure. The Funds 

and each person acting on behalf of the 

Funds will continue to be required to 

comply with Regulation Fair Disclosure 

as if it applied to them (except that the 

exemptions provided in rule 

100(b)(2)(iii) therein shall not apply). 

Applicants believe that the new 

Creation Basket flexibility being sought 

by the Applicants does not raise any 

new concerns about selective disclosure 

of non-public material information. 

First, a Fund’s use of, or conversations 

with APs about, Creation Baskets that 

would result in such disclosure would 

effectively be limited by the Funds’ 

obligation to comply with Regulation 

Fair Disclosure. Second, as noted above, 

each Business Day, before the open of 

trading on the Exchange where a Fund 

is listed, the Fund will publish on its 

website the composition of any basket 

accepted by the Fund on the previous 

Business Day that differed from such 

Business Day’s Tracking Basket other 

than with respect to cash. 

III. Requested Exemptive Relief 

For the reasons stated above, 

Applicants believe that the Prior Order, 

as amended, continues to meet the 

relevant standards for relief pursuant to 

section 6(c) of the Act for an exemption 

from sections 2(a)(32), 5(a)(1), 22(d), and 

22(e) of the Act and rule 22c–1 under 

the Act, and under sections 6(c) and 

17(b) of the Act for an exemption from 

sections 17(a)(1) and 17(a)(2) of the Act, 

and under section 12(d)(1)(J) of the Act 

for an exemption from sections 

12(d)(1)(A) and 12(d)(1)(B) of the Act.12

IV. Applicants’ Conditions 

Applicants agree that the Amended 

Order granting the requested relief will 

be subject to all of the conditions in the 

Prior Order, except that condition A.9 of 

the Prior Order is deleted in its entirety 

and replaced with the conditions A.9– 

A.10 as follows: 

9. Each Fund will comply with the 

recordkeeping requirements of rule 6c– 

11 under the Act, as amended, except 

that for purposes of this condition, only 

Creation Baskets different from the 

Fund’s Tracking Basket will be treated 

as a ‘‘custom basket’’ under rule 6c– 

11(d)(2)(ii). In addition, each Fund will 

maintain and preserve, for a period of 

not less than five years, in an easily 

accessible place, (i) a copy of the 

Tracking Basket published on the 

Fund’s website for each Business Day; 

and (ii) a copy of each Creation Basket 

made available. 

10. Each Fund will adopt and 

implement written policies and 

procedures that govern the construction 

of Creation Baskets, as required under 

rule 6c–11(c)(3) under the Act, as 

amended, except that for purposes of 

this condition, only Creation Baskets 

different from the Fund’s Tracking 

Basket will be treated as a ‘‘Custom 

Basket’’. The Fund’s basket policies and 

procedures will be covered by the 

Fund’s compliance program and other 

requirements under rule 38a–1 under 

the Act, as amended. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–15015 Filed 7–14–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92359; File No. SR–MIAX– 

2021–28] 

Self-Regulatory Organizations; Miami 

International Securities Exchange LLC; 

Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Establish Fees for the 

cToM Market Data Product 

July 9, 2021. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on June 30, 

2021, Miami International Securities 

Exchange LLC (‘‘MIAX’’ or ‘‘Exchange’’) 


khammond on DSKJM1Z7X2PROD with NOTICES